I spoke at a conference recently on the topic of starting an assisted living facility. Some of the questions from the audience indicated that there were some who, in my humble opinion, were not asking the right questions.
Questions included things like:
“How important is location?”
“How long will it take to fill a new facility?”
“Are there any special loans or grants available?”
These are good and important questions. But all of the questions from the audience involved the property, the financing and construction – real estate questions.
After answering all of these questions, I told the audience that I think they need to keep something very important in mind. That is…
Build a Business, Not Just a Facility
An assisted living facility is a combination of housing and services. I often see many focus on the housing and not on the services, usually on their way to problems. When you’re thinking about the services your facility will offer and the business that you’ll operate, there are several issues to consider. Here’s a short list to start your planning.
Program – Who will you serve? What is your niche? How do you stand out from your competitors? Is there a market for what you plan to offer?
Financial Management – I often ask new buyers how they plan to handle payroll, and it seems many have never given it a thought. Providers that don’t start with solid financial management and systems are almost always facing challenges. What’s your break-even point and do you have enough capital reserves?
Human Resources – If this is your first assisted living community, you may be the owner and also the administrator or executive director, too. Or, will you hire a management company to oversee day to day operations? And, if you’re expanding, how will you prevent yourself from being spread too thin and losing control of quality? Will you hire management staff to share the workload? Where will your employees come from and how much will they cost – not just pay rates but taxes, benefits and more?
Marketing – You can’t get by with a simple Yellow Page ad anymore. What resources will you need to fill your facility? How will you get your message out? And what is your message? Don’t try to be all things to all people in your program or in your marketing.
Exit – It’s never to early to know your exit strategy. When you’re starting your business, it’s important to know why. It’s also important to have an idea of what you want to accomplish so that you will know when you’ve met your goal, and when it might be time to exit. As you begin and expand your business, having an exit plan in mind may save a lot of trouble and money later.
This is a high level overview of a big topic and just an introduction of the items that might make up your business plan. Stop back to this site for a closer look at these and other issues in future posts.
Most assisted living and senior care providers do a great job of balancing housing and services, their real estate and their business. But if you’re getting started or you’re expanding, remember to build your business and not just your next facility.
Please share your experience with a comment. What do you wish you’d known about your business when you were starting out or embarking on expansion?